Friday, March 23, 2012

Wall Street Confidence Trick: The Interest Rate Swaps that Are Bankrupting Local Governments

The “toxic culture of greed” on Wall Street was highlighted again last week, when Greg Smith went public with his resignation from Goldman Sachs in a scathing oped published in the New York Times. In other recent eyebrow-raisers, LIBOR rates—the benchmark interest rates involved in interest rate swaps—were shown to be manipulated by the banks that would have to pay up; and the objectivity of the ISDA (International Swaps and Derivatives Association) was called into question, when a 50% haircut for creditors was not declared a “default” requiring counterparties to pay on credit default swaps on Greek sovereign debt. (Image: Rolling Stone magazine)
Interest rate swaps are less often in the news than credit default swaps, but they are far more important in terms of revenue, composing fully 82% of the derivatives trade. In February, JP Morgan Chase revealed that it had cleared $1.4 billion in revenue on trading interest rate swaps in 2011, making them one of the bank’s biggest sources of profit. According to the Bank for International Settlements:

[I]nterest rate swaps are the largest component of the global OTC derivative market. The notional amount outstanding as of June 2009 in OTC interest rate swaps was $342 trillion, up from $310 trillion in Dec 2007. The gross market value was $13.9 trillion in June 2009, up from $6.2 trillion in Dec 2007.

For more than a decade, banks and insurance companies convinced local governments, hospitals, universities and other non-profits that interest rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools. The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or “acts of God.” It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008. The banks got in trouble, and the Federal Reserve and federal government rushed in to bail them out, rewarding them for their misdeeds at the expense of the taxpayers.
How the swaps were supposed to work was explained by Michael McDonald in a November 2010 Bloomberg article titled “Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire”:

In an interest-rate swap, two parties exchange payments on an agreed-upon amount of principal. Most of the swaps Wall Street sold in the municipal market required borrowers to issue long-term securities with interest rates that changed every week or month. The borrowers would then exchange payments, leaving them paying a fixed-rate to a bank or insurance company and receiving a variable rate in return. Sometimes borrowers got lump sums for entering agreements.

Banks and borrowers were supposed to be paying equal rates: the fat years would balance out the lean. But the Fed artificially manipulated the rates to the save the banks. After the credit crisis broke out, borrowers had to continue selling adjustable-rate securities at auction under the deals. Auction interest rates soared when bond insurers’ ratings were downgraded because of subprime mortgage losses; but the periodic payments that banks made to borrowers as part of the swaps plunged, because they were linked to benchmarks such as Federal Reserve lending rates, which were slashed to almost zero.
In a February 2010 article titled “How Big Banks’ Interest-Rate Schemes Bankrupt States,” Mike Elk compared the swaps to payday loans. They were bad deals, but municipal council members had no other way of getting the money. He quoted economist Susan Ozawa of the New School:

The markets were pricing in serious falls in the prime interest rate. . . . So it would have been clear that this was not going to be a good deal over the life of the contracts. So the states and municipalities were entering into these long maturity swaps out of necessity. They were desperate, if not naive, and couldn’t look to the Federal Government or Congress and had to turn themselves over to the banks.

Elk wrote:

As almost all reasoned economists had predicted in the wake of a deepening recession, the federal government aggressively drove down interest rates to save the big banks. This created opportunity for banks – whose variable payments on the derivative deals were tied to interest rates set largely by the Federal Reserve and Government – to profit excessively at the expense of state and local governments. While banks are still collecting fixed rates of from 4 percent to 6 percent, they are now regularly paying state and local governments as little as a tenth of one percent on the outstanding bonds – with no end to the low rates in sight.
. . . [W]ith the fed lowering interest rates, which was anticipated, now states and local governments are paying about 50 times what the banks are paying. Talk about a windfall profit the banks are making off of the suffering of local economies.
To make matters worse, these state and local governments have no way of getting out of these deals. Banks are demanding that state and local governments pay tens or hundreds of millions of dollars in fees to exit these deals. In some cases, banks are forcing termination of the deals against the will of state and local governments, using obscure contract provisions written in the fine print.

By the end of 2010, according to Michael McDonald, borrowers had paid over $4 billion just to get out of the swap deals. Among other disasters, he lists these:

California’s water resources department . . . spent $305 million unwinding interest-rate bets that backfired, handing over the money to banks led by New York-based Morgan Stanley. North Carolina paid $59.8 million in August, enough to cover the annual salaries of about 1,400 full-time state employees. Reading, Pennsylvania, which sought protection in the state’s fiscally distressed communities program, got caught on the wrong end of the deals, costing it $21 million, equal to more than a year’s worth of real-estate taxes.

In a March 15th article on Counterpunch titled “An Inside Glimpse Into the Nefarious Operations of Goldman Sachs: A Toxic System,” Darwin Bond-Graham adds these cases from California:

The most obvious example is the city of Oakland where a chronic budget crisis has led to the shuttering of schools and cuts to elder services, housing, and public safety. Oakland signed an interest rate swap with Goldman in 1997. . . .
Across the Bay, Goldman Sachs signed an interest rate swap agreement with the San Francisco International Airport in 2007 to hedge $143 million in debt. Today this agreement has a negative value to the Airport of about $22 million, even though its terms were much better than those Oakland agreed to.

Greg Smith wrote that at Goldman Sachs, the gullible bureaucrats on the other side of these deals were called “muppets.” But even sophisticated players could have found themselves on the wrong side of this sort of manipulated bet. Satyajit Das gives the example of Harvard University’s bad swap deals under the presidency of Larry Summers, who had fought against derivatives regulation as Treasury Secretary in 1999. There could hardly be more sophisticated players than Summers and Harvard University. But then who could have anticipated, when the Fed funds rate was at 5%, that the Fed would push it nearly to zero? When the game is rigged, even the most experienced gamblers can lose their shirts.
Courts have dismissed complaints from aggrieved borrowers alleging securities fraud, ruling that interest-rate swaps are privately negotiated contracts, not securities; and “a deal is a deal.” So says contract law, strictly construed; but municipal governments and the taxpayers supporting them clearly have a claim in equity. The banks have made outrageous profits by capitalizing on their own misdeeds. They have already been paid several times over: first with taxpayer bailout money; then with nearly free loans from the Fed; then with fees, penalties and exaggerated losses imposed on municipalities and other counterparties under the interest rate swaps themselves.
Bond-Graham writes:

The windfall of revenue accruing to JP Morgan, Goldman Sachs, and their peers from interest rate swap derivatives is due to nothing other than political decisions that have been made at the federal level to allow these deals to run their course, even while benchmark interest rates, influenced by the Federal Reserve’s rate setting, and determined by many of these same banks (the London Interbank Offered Rate, LIBOR) linger close to zero. These political decisions have determined that virtually all interest rate swaps between local and state governments and the largest banks have turned into perverse contracts whereby cities, counties, school districts, water agencies, airports, transit authorities, and hospitals pay millions yearly to the few elite banks that run the global financial system, for nothing meaningful in return.

Why are these swaps so popular, if they can be such a bad deal for borrowers? Bond-Graham maintains that capitalism as it functions today is completely dependent upon derivatives. We live in a global sea of variable interest rates, exchange rates, and default rates. There is no stable ground on which to anchor the economic ship, so financial products for “hedging against risk” have been sold to governments and corporations as essentials of business and trade. But this “financial engineering” is sold, not by disinterested third parties, but by the very sharks who stand to profit from their counterparties’ loss. Fairness is thrown out in favor of gaming the system. Deals tend to be rigged and contracts to be misleading.
How could local governments reduce their borrowing costs and insure against interest rate volatility without putting themselves at the mercy of this Wall Street culture of greed? One possibility is for them to own some banks. State and municipal governments could put their revenues in their own publicly-owned banks; leverage this money into credit as all banks are entitled to do; and use that credit either to fund their own projects or to buy municipal bonds at the market rate, hedging the interest rates on their own bonds.
The creation of credit has too long been delegated to a cadre of private middlemen who have flagrantly abused the privilege. We can avoid the derivatives trap by cutting out the middlemen and creating our own credit, following the precedent of the Bank of North Dakota and many other public banks abroad.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. She is president of the Public Banking Institute, http://PublicBankingInstitute.org, and has websites at http://WebofDebt.com and http://EllenBrown.com.

Bank of America: Too Crooked to Fail

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?

By Matt Taibbi

March 14, 2012 10:55 AM ET

Illustration by Victor Juhasz Page 1 of 5

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.
It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.
But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.
They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.
Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.
Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers. Two and a half centuries after we kicked out the British, it's really come to this?Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy – the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to rebuild the city after the devastating earthquake of 1906.
But like many of the truly bad ideas in history, the present-day version of Bank of America was the product of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down.

Bank of America: Too Crooked to Fail

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The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition into one of the most ridiculous and elaborate penis-measuring contests in the history of American business – even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late Eighties, Crutchfield topped McColl with the city's first post­modern high-rise, One First Union Center, at 42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the "Taj McColl." When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-story weenie, McColl didn't hesitate. "Do I prefer having the tall one?" he said. "Yes."
For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law – specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was "to prevent an undue concentration of banking and financial power, and instead keep the private control of credit diffused as much as possible."
But these laws didn't sit well with Hugh McColl. To him, size was everything. "We realized that if we didn't leave North Carolina," he explained later in his career, "we would never amount to anything – that we would not be important." Note that he didn't say the ban on expansion prevented him from turning a profit or earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then, following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a "military approach" to his business, went to ridiculous lengths to play up the manly conquest aspect of his bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.
A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over Bank of America, realizing his dream of creating what one trade publication called "the first ocean-to-ocean bank in the nation's history." Later, after McColl retired, his successors kept up his acquisitive legacy, buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.
But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. "I have no regrets about building it large," he said in 2010, when asked if he considered all the monster consolidations a mistake in light of the crash of 2008. "I may have some regrets about not building it larger."
This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the government was essentially committing public resources to preserve this lunatic spending spree – which means two successive presidential administrations have now spent nearly half a decade and hundreds of billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the "taller one."
And why? The rationale for allowing that merger spree in the first place was based on a phony assumption: that big banks would somehow be more efficient and more profitable than small ones. "The whole premise of a Citibank or a Chase or a Bank of America is wrongheaded," says Susan Webber, an analyst who writes one of the most popular and respected financial blogs under the pseudo­nym Yves Smith. "Studies consistently show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and fraud."
And man, what a lot of fraud!In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in history.
The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants without identification, the unemployed and people with poor credit histories. Then the banks took those dicey home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find. In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the world marketing their product as high-grade weed.
The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender (the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of America's "appetite for risky products was greater than that of Countrywide."
The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it promised, in writing, that all its loans had passed due diligence tests and met its high internal standards. Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were all insured, or "wrapped," by bond insurers like AMBAC and MBIA.
It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could go wrong?
As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart virtually from the day they were delivered.
First of all, despite the fact that the banks had promised that all the loans in their pools met their internal lending standards, that turned out to be completely untrue. An SEC­ investigation later found out, for instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it, "Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would underwrite any loan it could sell." Translation: Countrywide gave home loans to anything with a pulse, provided they had a sucker lined up to buy the loan.
How did they make these loans in the first place? By committing every kind of lending fraud imaginable – particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the nation's subprime loans were "liar's loans," meaning that lenders could state the incomes of borrowers without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's "reduced documentation loans" potentially had "income overstated by more than 10 percent... and a significant percent of those loans would have income overstated by 50 percent or more."
"What large numbers of Countrywide employees did every day was commit fraud by knowingly making and approving loans they knew borrowers couldn't repay," says William Black, a former federal banking regulator. "To do so, it was essential that the loans be made to appear to be relatively less risky. This required pervasive documentation fraud."
So what happened when institutional investors realized that the loans they had bought from Countrywide were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in 2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75 billion – only to discover their shiny new investment vehicle started throwing rods before they could even drive it off the lot. "Soon after being sold to the Trust," U.S. Bancorp later observed in a lawsuit, "Countrywide's loans began to become delinquent and default at a startling rate." The trustees hired a consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering "no basis for its refusal."

Bank of America: Too Crooked to Fail

And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well, those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did your insurer. At best, you two could now share a blanket in the poorhouse.
Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they were fraudulently induced to insure the bank's "high lending standards." AMBAC, the second-largest bond insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000 Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97 percent of the loans didn't meet the stated underwriting standards. That same year, the Association of Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it should be repurchasing as much as $20 billion in defective mortgages.
Some of these institutional investors were at least partial accomplices to their own downfall. In the boom era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was bound to blow up on somebody innocent. "A teacher or a fireman goes to work and saves money for their retirement via their pensions," says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent two years researching Bank of America. "That pension fund buys toxic securities put together by Wall Street that were designed to fail. So when that security blows up, wealth flows directly from that pension fund into the hands of a select few."
This is the crossroads where Bank of America now lives – trying to convince the government to allow it to remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical. Last year, the bank settled with a group of pension and retirement funds, including public employees from Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.
In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded customers. But countless other investors are still howling for Bank of America to take back its counterfeit product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the brokers knew that the auction-rate market was already going bust. "Market is collapsing," a Merrill executive named John Price admitted in an internal e-mail, before joking about having to give up pricey dinners at a fancy Manhattan restaurant. "No more $2K dinners at CRU!!"
In the end, says Mehta, Bank of America's fraud resulted in "one of the biggest reverse transfers of wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the collapse of their own exuberance by devising a way to shift the losses to countless pension funds, endowments and other innocent investors." The assembled worldwide collection of swindled pensioners and unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125 points. Corn dogs, Bank of America! Where are the freaking corn dogs!Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your money ends up in their pockets, they just slither off into the night, no matter their legal or professional obligations.
Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997. "Our research shows it could be more than $100 million," Craig Watkins, the county's district attorney, told reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes to keep the schools open.
But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone, it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as 8,000 legal affidavits a month, but also to signing documents with a fake title.
Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America consider the mass, factory-style production of tens of thousands of fake legal documents per month not that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of America.
Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some $4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)
Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids – a mobster's crime, for which the accused used to do serious time, back when the bids were for construction and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money, the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose "turn" it was to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application "means that Bank of America is an admitted felon." Think about that when you hear about all the bailouts the bank has gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet Bank of America is allowed to receive billions in federal aid and dominate the electoral process with campaign contributions?
Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued, alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many adjustable-rate financial products are based on LIBOR – so if the big banks could get together and artificially lower the rate, they would pay out less to customers who bought those products. "About $350 trillion worth of financial products globally reference LIBOR," says one antitrust lawyer familiar with the case. "Which means," she adds in a striking understatement, "that the scale of this conspiracy is extremely large."
What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming President Obama's HAMP program, which was designed to aid families who had already been victimized by the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time to pay up. "The vast majority tell us the same thing," says Steve Berman, an attorney for the plaintiffs. "Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about the status of their loans and even took actions toward foreclosure without informing homeowners of their options." The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by holding out the carrot of federal aid they would never receive.
Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes helping a victim get a loan modification.
The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously, who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?
Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan, is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan to gouge all debit-card users with $5 fees by citing his divine privilege: "We have a right to make a profit." And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives to charities! "I get a little incensed when you think about how much good all of you do, whether it's volunteer hours, charitable giving we do, serving clients and customers well," he told employees last October. Then, addressing would-be protesters: "You ought to think a little about that before you start yelling at us."
In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!
So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles, commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without saying that you rescue that "admitted felon" at all costs – even if you have to spend billions in taxpayer money to do it.

Bank of America: Too Crooked to Fail

Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing, it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in potential lawsuits that came with it. "They tried to catch a falling knife and lost their hand and foot in the process," says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's bicoastal dream bank should have gone the way of the dinosaur.
But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another $25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion in Bank of America debt.
So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696 executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to 172 executives.
In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly borrowing billions in low-­interest emergency loans from the Fed – part of $7.7 trillion in "secret" loans that were not disclosed by the central bank until last year. When the data was finally released, we found out that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.
That means that when you take out a credit card or a mortgage or a refinancing from Bank of America, you're essentially borrowing from the state; the "private" bank is simply taking a cut as a middleman. "For banks, the cost of capital is the key to success," says former New York governor Eliot Spitzer. "So by lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big profits."
Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers. Just like the state pensions in Iowa and Maine and Missis­sippi, Fannie and Freddie were targeted for sales of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked. Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail prices, has always been an ongoing hidden bailout to the banks.
But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.
But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our pockets, making for yet another shadow bailout to the firm.
It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered, complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses. Black, the former regulator, calls the transfer an "obscenity. As a regulator, I would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines."But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. "We are Americans, and we look out for one another; we get each other's backs," he declared. "We're going to make sure that banks live up to their end of the bargain."
In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from the government, which they will presumably be just as free to ignore. Why? Because while state officials have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will be handled by "internal quality control groups." In other words, Bank of America itself will be grading its own compliance!

Bank of America: Too Crooked to Fail

Page 5 of 5

Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to address the wider fraud that went on in creating and pooling mortgages. "It's like handing a box of tissues to someone whose immune system has been destroyed by AIDS," says Rosner. "It doesn't come close to addressing the scale of the problem." Many Wall Street observers think that without the waiver from federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for robo-signing offenses alone.
Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation that year. You do the math.
And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for depositors by as much as $25 a month – what one market analyst called a "measure of last resort."
The company reported positive earnings last year, with net income of $84 million, but analysts aren't convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to "very dangerous" in part because its accounting is wildly optimistic. Among other things, the bank's projections assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are so likely, says Mehta, it's "virtually impossible to decipher if Bank of America requires more equity, or even another tax­payer bailout."
But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's ever "real" is the fat bonuses the executives cash out of the bank at the end of each year. "Fraud is a sure thing," says Black. "The firm fails, unless it is bailed out, but the controlling officers walk away wealthy."
The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing them out. "The way to cut our Gordian financial knot is simple," MIT economist Simon Johnson wrote in The New York Times. "Force the big banks to become smaller." But few in the financial community believe that will ever happen. "If Bank of America crashes, the first thing that would happen is Dodd-Frank would be revealed as a fraud," says Rosner. "The Fed and the Treasury would ask Congress for a bailout to 'save the economy.' It's the worst-kept secret on Wall Street."
In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly punished by the market – the executives would get to loot their own firms once, then they'd be looking for jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never succeed.Related
• J.P. Morgan Chase's Ugly Family Secrets RevealedThis story is from the March 29th, 2012 issue of Rolling Stone.

Wednesday, March 21, 2012

For years, corporations have been peddling myths to rally us behind their interests. Here are three things everyone “knows,” and why they're wrong.

By Lisa Graves

March 20, 2012 "Yes Magazine" -Winston Churchill reportedly said, “A lie gets halfway around the world before the truth has a chance to put its pants on.” That was before corporations had perfected the art of public relations, investing millions of dollars in PR campaigns to advance their commercial and political interests.The fact is, there are a number of things most people know are true—except they’re not. That’s the result of well-planned, well-funded, long-term propaganda campaigns designed to make people believe things that are against their own best interests.One relatively new example is the climate denial industry, which is funded by some of the richest corporations and CEOs on the planet to protect their profits from regulations that would address climate change. Although it’s one of the biggest threats we have ever faced, an increasing number of Americans believe there is widespread disagreement in the scientific community about climate change.But that’s not true—there is actually widespread scientific agreement on climate, and a few dissenters, most paid in some way by the oil industry. Millions of dollars have been spent to create the appearance of disagreement, including deployment of so-called experts and even TV meteorologists to repeat talking points favored by big oil.In the past year, the Internet and social media have brought together social movements across the globe, and there are signs that, in this new information age, people are breaking through the fog of corporate disinformation. But some of the “facts” have been repeated for so many years that a lot of people still think they are true.

“Social Security is Broke”

—The Cass City Chronicle (Jan. 22, 1976)For more than 30 years, opponents of Social Security have peddled this lie.The roots of the efforts to attack Social Security run deep in the far right. They include CEOs such as Fred Koch, who promoted the John Birch Society’s red-scare-era smears that such New Deal reforms were “socialist” or “communist.” In the 1970s, Fred’s sons, Charles and David, inherited his billions—and his ideas. Charles began funding think tanks to develop arguments for dismantling Social Security.David ran for vice president on the 1980 Libertarian ticket with a platform that included privatizing Social Security. Since then he’s spent millions on groups to push disinformation about Social Security and promote an array of sophisticated corporate propaganda. The donations of Koch Industries and others to groups like the American Legislative Exchange Council (ALEC) that promote claims that Social Security is going broke have paid off. Also, as detailed in SourceWatch, billionaire Peter Peterson has pledged a billion dollars to attacking Social Security. And, guess what? Almost all the current crop of GOP presidential candidates have called Social Security a scam.The truth is that Social Security wasn’t broke in 1976, and it’s not broke today. According to trusted actuaries, in about 25 years Social Security could face a shortfall—a gap that would allow it to pay most but not all of the earned benefits—unless it’s fixed.One easy solution is to apply Social Security taxes to all earned income. Under the current system, any wages over the first $106,800 are exempt from Social Security withholding. If we close this loophole soon, the potential shortfall would be solved. Only about 6 percent of Americans earn that much, and removing this exemption would help ensure that the other 94 percent have the protection of this basic social safety net for decades to come.

Tort Reform “Creates Jobs” —Wisconsin Gov. Scott Walker, ALEC alum

The first controversial bill Gov. Walker signed into law last year wasn’t his union-busting effort but a “tort reform” package he claimed would “create jobs.” This omnibus bill, which included numerous items that echo “model” bills from the ALEC bill factory, was rushed through so fast most folks barely had time to read it. But the U.S. Chamber of Commerce immediately applauded the bill and so did ALEC. Such legislation is on the wish list of the global corporations funding these groups and many politicians.Tort reform is a made-up phrase that really means changing the rules for Americans killed or injured by corporations or other defendants. It’s been making its way through states across the country based on claims that it will create jobs, protect access to medical care, and bring down insurance rates.But legal changes like those in Wisconsin make it harder for Americans to hold a company or careless physician responsible for all the damages caused by their negligence. Such changes make it harder for juries to punish companies to help deter egregious and deadly corporate acts.Such bills are often pushed based on claims that corporations fear getting “unfairly” sued. But changes like those in Wisconsin have nothing to do with frivolous lawsuits. Caps on damages, for example, apply only after a jury of American citizens has heard the facts and found the company was responsible for the harm.Plus, there is no conclusive evidence that these changes to the law create jobs. In Wisconsin, for example, Walker claimed his tort reforms and other changes would create 250,000 new private-sector jobs, but the state ended last year with five months in a row of job losses.The reality is that surveys of local businesses about what would lead them to hire more people reveal that the answer is more sales, not less litigation. In Wisconsin, for example, in a survey of state businesses about what would improve business, tort reform was dead last.Tort reform is just more of the race to the bottom, pitting state against state to protect their citizens the least. The reality is that ALEC and the U.S. Chamber are bankrolled by global corporations trying to pay American workers the least, provide workers the fewest rights and benefits, and compensate as little as possible for consumers who are injured.Lives and livelihoods are the real costs of tort reform, which is being sold through calculated corporate disinformation.

We Need the Keystone XL Pipeline for Our “Jobs and National Security”

—Jack Gerard, CEO of the American Petroleum InstituteThe richest industry on the planet is putting money behind claims that controversial energy projects, from natural gas fracking to the Keystone XL pipeline, are essential to our national security. Americans are vulnerable to such claims as gas prices rise in response to another round of saber-rattling in the Middle East.People have been bombarded with corporate-backed claims that national security demands immediate approval of the controversial Keystone XL pipeline connecting the Alberta, Canada, tar sands to the Gulf Coast in Texas. But the claims are misleading.First, the crude oil from the dirty tar sands extraction process comes from Canada, not the United States, so the oil does not belong to the American people. The oil is not Canada’s either. Rights to it have been sold to multinational companies whose interest is the highest price.Second, take a look at the map of the proposed pipeline. Its target is the refinery world of Port Arthur, Texas, which is focused on exporting oil via the Gulf of Mexico. Refiners in Texas on board to process tar sands crude include Royal Dutch Shell, the Saudi government, and the French oil company Total. A Texas company, Valero, which operates in a “Foreign Trade Zone” in Port Arthur, which limits customs duties, has pitched investors on exporting the diesel from tar sands crude while importing gas to America.Don’t believe the corporate propaganda on jobs either. In an earlier phase of the pipeline in South Dakota, almost 90 percent of the 2,500 jobs were filled by workers not from that state, and most of the jobs were low-wage and temporary, according to testimony from TransCanada, the pipeline’s developer.

To Tell the Truth …

These are just a few examples. If you want to find out more on these issues and corporate PR techniques, check out our research and resources at PRWatch.org, SourceWatch.org, and ALECexposed.org.Despite the gloomy picture of the success of some of these propaganda campaigns, there is hope. The Keystone XL pipeline looked like a done deal. But demonstrations at the White House led by 350.org that resulted in 1,253 arrests, combined with citizen outcry in the heartland states the pipeline would cross, resulted in denial of the permit to build. The day after the Obama administration announced that decision, a group of politicians held a press conference. You guessed it: They said that stopping the pipeline threatened jobs and national security.And, as economist Dean Baker points out, for all the hostile rhetoric over the years, Social Security is undamaged so far, although this guaranteed pension is difficult to live on alone, since it has not been fully funded by including all wages in withholding over the years.We’re up against big, rich opponents. But at least if you know the truth, the next time you hear someone say, “Social Security is broke,” you can say, “No it’s not.” And even explain why.Lisa Graves wrote this article for 9 Strategies to End Corporate Rule, the Spring 2012 issue of YES! Magazine. Lisa is executive director of the Center for Media and Democracy and publisher of PRWatch, SourceWatch, BanksterUSA, and ALECexposed.org.

About Me

Right To Share Food
At Right To Share Food, we believe that sharing food with our brothers and sisters is a fundamental human right. We believe that sharing food is a constitutionally protected activity, guaranteed under the freedom of association clause of the first amendment of The Constitution of the United States of America. We believe that sharing food outside and in public is an equally protected activity. Our goal is to promote cooperation among people in order to exercise and defend this right.
Hello; let me introduce myself. My name is Michael Hubman. I am the founder and the facilitator of Right To Share Food. Since 2007 I have been lobbying on behalf of the human and civil rights of homeless people. I operate Watercorps, a charity that gives bulk drinking water to the homeless people living on the streets of Skid Row Los Angeles.
Conflict occurs when government, most often municipalities, attempt to effect social engineering by restricting or forbidding the sharing of food on public property, the commons and even private property.
Michael “Waterman” Hubman
http://righttosharefood.org